There are compelling data that clozapine has superior efficacy for severely chronic and refractory schizophrenic inpatients. However, the efficacy of clozapine in treatment-resistant outpatients has not been established. Because of the anticipates growing use of clozapine among outpatients, we propose to examine the efficacy and prediction of response of clozapine in treatment-resistant schizophrenic outpatients. After resistance to conventional neuroleptic treatment has been confirmed, outpatients with chronic residual symptoms will participate in a 10-week, double-blind parallel groups to study to determine the effects of clozapine on levels of positive and negative symptoms and functioning. Following the efficacy study, clozapine responders will be followed for one year to accumulate data regarding the longterm effects of clozapine on quality of life and course of illness. Brain morphologic characteristics, determined by magnetic resonance imaging, will be utilized to predict clozapine response. Clozapine-related changes in positive and negative symptoms will be related to volumetric measurements of the amygdala/hippocampus and the prefrontal cortex, respectively. These data may provide new information about clozapine's mechanism of action and the pathophysiology of schizophrenia.